My Adventures with Your Money

by George Graham Rice

THE REVERSE ENGLISH

Now, about the "reverse English" in this line of press-work. Similar ways and means, dear reader, that are just as scientific in their insidiousness have been used upon you to poison your mind against the value of mining investments of competing promoters, when it has been found to the interest of powerful men to bring this about.

When the offices of B. H. Scheftels & Company, with which I was identified, were raided in seven cities by Special Agent Scarborough (since permitted to resign) of the Department of Justice of the United States Government, in September, 1910, two of the men who had been active in bringing about the raid assembled in the parlor of the Astor House the newspaper men assigned to cover the story by New York and Brooklyn newspapers. There they gave out the information that Ely Central, which I had advised the purchase of at from 50 cents per share up to $4 and down again, was actually under option to me and my associates in large blocks at 5 cents. As a matter of fact, the average price paid over for this option stock in real hard money by my people was in excess of 90 cents per share, without adding a penny to the cost for expenses of mining engineers, publicity or anything else. My people had also partly paid for a block bought at private sale at the rate of $3 a share, besides buying tens of thousands of shares in the open market at $4 and higher. The New York Times and the New York Sun, two newspapers which make capital of the rectitude of both their news and advertising columns, published this statement, along with forty others that were just as false, if not more so. So did the New York American and the other Hearst newspapers of the United States.

The New York Times story related how I had personally cleaned up in fifteen months not less than $3,000,000 as the result of my market operations. As a matter of fact, I and my associates had impoverished ourselves trying to support the stock in the open market against the concerted attacks of rival promoters and other powerful interests on whose financial corns we had tread. Every well-informed person in Wall Street knows this.

The New York Times stated that every man connected with B. H. Scheftels & Company had tried to obtain membership on the New York Curb and that all of the requests were turned down. No application was ever made for membership because, first, the rules of the Curb forbade corporation memberships, and, second, the Scheftels company already employed several members on regular salary and more than a dozen members on a commission basis.

It was also stated that B. H. Scheftels & Company applied to the Boston Curb for membership and that their application was rejected. This was also a lie made out of whole cloth.

In three months, the New York Times said, no less than 400,000 letters had been received in reply to circulars sent out by B. H. Scheftels & Company. This is an average of over 5,000 letters for each business day during the period of three months. The exaggeration here was about 5,000 per cent.

All of the properties promoted by the Scheftels company were stated in the New York Times article to be "practically worthless." This was utter rubbish and so misleading that had I been accused of pocketpicking the effect could not have been more harmful.

Rawhide Coalition had produced upward of $400,000 in gold bullion, had probably been "high graded" to the extent of nearly as much more, according to the judgment of well-posted men on the ground, and not less than five miles of underground development work had been done on the property. Development work and production had never ceased for a day. Besides, when the Rawhide camp was still in its swaddling-clothes, I had originally purchased the controlling interest for Nat. C. Goodwin & Company at a valuation of $700,000 for the mine.

The control of Ely Central had been taken over by B. H. Scheftels & Company and paid for at a valuation well in excess of a million dollars for the property, and upward of $200,000 had been spent in mine development during the fourteen months of the Scheftels quasi-control. Jumbo Extension was a famous producer of Goldfield. Subsequent to the raid one-twentieth of its acreage was sold to the Goldfield Consolidated for $195,000. On July 15th of the current year the company disbursed to stockholders $95,000 in dividends, being 10 per cent. on the par of the issued capitalization. Bovard Consolidated, which was promoted at 10 cents a share as a speculation, had turned out to be a "lemon" after a period of active mine development, the values in the ore pinching out at depth, but B. H. Scheftels & Company had immediately informed stockholders to this effect.

The New York Times stated that B. H. Scheftels & Company sold Ely Central stock to the amount of five or six millions in cash and made a profit of $3,000,000 on the transactions. The books of the Scheftels company show that the company not only made no money on the sale of Ely Central but actually lost vast sums.

The New York Times said that it had been advertised that a carload of ore had been shipped from the Ely Central mine as a sample, but that the Government had not been able to find out to whom this carload of ore was consigned. The truth was that the consignment had been made to the best-known smelter company in the United States, that the ore averaged seven per cent. copper, and that it could not have been shipped out of camp except over a single railroad which has the monopoly—an easy transaction to trace.

B. H. Scheftels & Company were accused by the New York Times of clearing up nearly $600,000 in three months on the promotion of the South Quincy Copper Company. The facts were that, after receiving $30,000 in subscriptions and returning every subscription on demand because of the slump in metallic copper, the Scheftels company abandoned the promotion and never even applied for listing of the stock in any market. A large sum was lost by the Scheftels company here.

Even in stating the penalty for misuse of the mails, which was the crime charged by the Government agent who afterwards resigned as a consequence of conduct objectionable to the Government, the New York Times stated that the punishment was five years in prison, which was more hop-skip-and-go-merry mistaking. The crime is a misdemeanor and the maximum penalty for an offense is eighteen months.

I have counted not less than five hundred unfounded and misleading statements of this kind regarding myself and associates that have been made in the past year by newspapers and press associations. The shadow has been taken for the substance.

Now, the Scheftels raid, I shall prove in due time, was the culmination of as bitterly waged a campaign of misrepresentation and financial brigandage as has ever been recorded. Chronologically an introduction of the subject is out of place here. The effect, however, of the press-agenting which formed a part of the campaign of destruction is pertinent to the topic under consideration.

The immediate result was that thousands of stockholders in the various mining companies that had been sponsored by the Scheftels company were robbed of an aggregate sum amounting into millions, which represented the ensuing decline in market value of the stocks.

The newspaper campaign of misrepresentation and villification was essential to the plans and purposes of the men who sicked the Government on to me. The final destruction of public confidence in the securities with which I was identified became necessary to justify the whole proceeding in the public mind.

On the surface of the play it was made to appear that the Government of the United States had reached out righteously for the suppression of a dangerous band of criminals. The story in the New York Times and other newspapers on the day after the raid was justification made to this end.

The fact that tens of thousands of innocent stockholders might lose their all, as a result of the foul use of powerful maladroit publicity-machinery, did not stop the conspirators for a moment. I had a youthful past and, therefore, the newspapers took little chance in publishing anything without investigation and proof that might be offered. And they went the limit, particularly those newspapers that are in the habit of permitting the use of their news columns from time to time to help along the publicity measures of powerful interests.

Contrasted with the comparatively harmless "faking" that characterized Rawhide's press-agenting, the raw work of the newspapers just described is as different as angel-cake from antimony. If you are not yet convinced, hearken to this: